David Jones, Myer told to change if they want to survive

Myer has struggled to hold onto its customer base in recent years. Source: Getty

Australian department stores Myer and David Jones have been told to make “aggressive” changes to their business strategy or suffer the consequences of a world increasingly turning to online shopping.

Macy’s Executive Chairman Terry Lundgren, who is stepping down from his role after 15 years, says Myer and David Jones need to offer customers exciting and unique experiences if they want to stem the hemorrhage of people turning to online shopping.

“What I would advise to competitors is to find products that are unique to you, and make sure you offer an experience that’s unique and different than what the online experience would be,” he told The Sydney Morning Herald.

Lundgren helped steer Macy’s, one of America’s most popular department stores, through the rise of online shopping, helping bring it back from the precipice after facing liquidation in recent years.

If Australian stores were to follow in Macy’s footsteps it would mean reducing bricks and mortar presence and offering services such as ‘click and collect’, where customers purchase items online and pick them up in store. The Sydney Morning Herald reports the strategy has been a success for Macy’s with customers spending on average 25 per cent more when using the service.

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Myer is already taking steps towards this strategy, closing five stores since 2015 and putting a further 19 up for consideration if it can’t negotiate cheaper leases. It also introduced a ‘click and collect’ to cut out shipping costs for customers and save on manpower for the business.

In September last year, Myer reported a 80 per cent decline in profits, taking home just $11.9 million in full-year profits. David Jones suffered a 25 per cent decline. It comes after some of the countries most well-known brands were placed into administration or closed down completely in recent years.

Dick Smith, David Lawrence and Marcs have all closed their doors, while shoe designer Diana Ferrari is shutting its stores and will be sold online instead. Iconic Aussie brand Oroton was rescued from administration in early January with a last-minute deal to keep the accessories brand alive. Caledonia Funds Management chief investment officer Will Vicars purchased the Australian-run business from the Lane family, who founded the company in 1938.

The sticking point for many customers is service, with reduced staffing in stores making it difficult to offer the kind of personalised experience many customers crave. While online shopping is convenient and time-efficient for busy people, those who prefer to peruse in store and try before they buy are sometimes left wandering the floor in search of staff.

“The number of stores you walk into without acknowledgement by staff (when not busy serving customers) or checking after a reasonable amount of time if they can be of assistance is getting worse,” one woman wrote on Facebook.

“The number of casual employees is a large part of this, they don’t have any guarantee their job will be there next week, so why bother and alternately the company doesn’t see the need to properly ‘train’ their ‘casuals’,” added another.

Do you still shop at Myer and David Jones regularly? What changes would you like to see in the stores?

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